USD/CAD – Canadian dollar steady, US consumer confidence next

The Canadian dollar continues to have a quiet week. In Tuesday’s North American session, USD/CAD is trading at 1.3319, up 0.19% on the day. On the release front, there are no Canadian events until Thursday, so U.S indicators will have an added impact on the movement of USD/CAD. In the U.S, the key event is CB Consumer Confidence, which is expected to drop to 127.6 points. On Wednesday, the U.S releases durable goods reports.

The Bank of Canada has dropped hints that it is ready to raise rates in the second half of 2018, but policymakers have concerns both internally and on the global stage. The escalating trade war between the U.S and China could have serious repercussions for the Canadian economy. President Trump hasn’t spared Canada from tariffs, and with 80% of Canadian exports headed to the U.S, Canada can ill-afford a trade spat with its giant southern neighbor. On the domestic front, Canadian consumer inflation and spending data was softer than expected. Retail Sales was dismal, with a sharp drop of 1.2 percent. Despite these soft numbers, the BoC remains confident about the economy, and a July rate hike remains a reasonable possibility. Inflation is still above the target of 2.0%, and in its May policy statement the BoC removed its reference to “cautious”, replacing it with “gradual” describing its approach to rate adjustments. The markets viewed this as a signal that the bank is preparing to press the rate trigger. A rate hike would likely boost the Canadian dollar, as it makes the currency more attractive to investors.

There is widespread concern among central bankers that recent protectionist moves could hamper global growth and financial stability. This was the message on Sunday from the Bank of International Settlements (BIS), which acts as an umbrella group for some 60 central banks. The BIS also warned that the escalating trade war could have negative side effects on the currency markets. At the same time, the BIS expressed support for the Federal Reserve raising interest rates gradually and for the ECB heading towards normalization as it winds up its massive asset program.

  US Treasury Secretary Warns of Forthcoming Announcement on Investment Restrictions

  Not out of the weeds yet

  Trade spats continue to weigh

USD/CAD Fundamentals

Tuesday (June 26)

• 9:00 US S&P/CS Composite-20 HPI. Estimate 6.9%
• 10:00 US CB Consumer Confidence. Estimate 127.6
• 10:00 US Richmond Manufacturing Index. Estimate 15
• 13:00 US FOMC Member Rafael Bostic Speaks

Wednesday (June 27)

• 8:30 US Core Durable Goods Orders. Estimate 0.5%
• 8:30 US Durable Goods Orders. Estimate -0.9%

*All release times are DST

*Key events are in bold

USD/CAD for Tuesday, June 26, 2018

USD/CAD, June 26 at 8:40 DST

Open: 1.3296 High: 1.3329 Low: 1.3281 Close: 1.3319

USD/CAD Technical

USD/CAD was flat in the Asian session and has posted small gains in European trade

• 1.3292 remains a weak support line. It was tested earlier in the day
• 1.3436 is the next resistance line
• Current range: 1.3292 to 1.3436

Further levels in both directions:

• Below: 1.3292, 1.3160, 1.3067 and 1.2970
• Above: 1.3436, 1.3530 and 1.3637

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